Note 6 - Related Party Transactions

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

6

.

Related Party

Transactions

Revolving Credit Agreement

On

March 6, 2017,

Cesca entered into

a Credit Agreement with Boyalife Investment Fund II, Inc. (the “Lender”). The Lender is a wholly owned subsidiary of Boyalife Group Inc., which is owned and controlled by the Company’s Chief Executive Officer and Chairman of the Board of Directors. The Credit Agreement grants to the Company the right to borrow up to

$5,000,000

in amounts of

$500,000

per advance on an unsecured basis (the “Loan”) at any time prior to

March 6, 2022 (

the “Maturity Date”).

On

September 13, 2017,

the Company entered into Amendment

No.

1

to the Credit Agreement (the “Amended Credit Agreement”). The Amended Credit Agreement

amends the Credit Agreement by increasing the Company’s maximum borrowing availability thereunder from

$5,000,000

to

$10,000,000.

In connection with such amendment, the Company and Lender entered into an amended and restated convertible promissory note to reflect the new aggregate maximum principal amount of

$10,000,000.

The Company has drawn down a total of

$6,700,000

as of

December 31, 2017.

The Credit Agreement and the Convertible Promissory Note issued thereunder (the “Note”) provide that the principal and all accrued and unpaid interest under the Loan will be due and payable on the Maturity Date, with payments of interest-only due on the last day of each calendar year. The Loan bears interest at

22%

per annum, simple interest, except that certain borrowed amounts used to pay legal expenses under the bill payment arrangement will

not

bear interest.

As of

December 31, 2017,

the Company had

$657,000

of interest accrued and payable included in other current liabilities on the consolidated balance sheet. The Company has

five

business days after the Lender demands payment to pay the interest due before the Loan is considered in default.

The Note can be prepaid in whole or in part by the Company at any time without penalty. If the Note is

not

repaid in full on or before the Maturity Date, the Lender has the right after the Maturity Date to convert any unpaid principal and accrued interest into shares of the Company

’s common stock at a conversion price equal to

90%

of the average daily volume-weighted average trading price of the Company’s common stock during the

10

trading days immediately prior to the Maturity Date, provided that the number of shares issuable upon such conversion

may

not

exceed

19.99%

of the number of outstanding shares of common stock of the Company on the date of the Credit Agreement (unless the Company obtains stockholder approval for such issuance in the manner required by the Marketplace Rules of the Nasdaq Stock Market, Inc.). 

The Maturity Date of the Note is subject to acceleration at the option of the Lender upon customary events of default, which include a breach of the Loan documents, termination of operations, or bankruptcy. The Lender

’s obligation to make advances under the Loan is subject to the Company’s representations and warranties in the Credit Agreement continuing to be true at all times and there being

no

continuing event of default under the Note. The Credit Agreement provides that if the Lender at any time in the future purchases the Company’s blood and bone marrow processing device business, the Lender would refund to the Company legal fees expended by the Company in connection with certain litigation expenses funded by the Company with proceeds of the Loan.

The Company recorded interest expense of

$535,000

for the

six

months ended

December 31, 2017

and

$122,000

for the year ended

June 30, 2017.

Distributo

r Agreement

On

August 21, 2017,

ThermoGenesis entered into an International Distributor Agreement with Boyalife W.S.N. Under the terms of the agreement, Boyalife W.S.N. was granted the exclusive right, subject to existing distributors and customers (if any), to develop, sell to, and service a customer base for ThermoGenesis

’ AXP (AutoXpress) System and BioArchive System in the People’s Republic of China (excluding Hong Kong and Taiwan), Singapore, Indonesia, and the Philippines (the “Territories”). Boyalife W.S.N. is related to our Chief Executive Officer and Chairman of our Board of Directors, and an affiliate of Boyalife (Hong Kong) Limited, our largest stockholder. Boyalife W.S.N,’s rights under the agreement include the exclusive right to distribute AXP Disposable Blood Processing Sets and use rights to the AXP(AutoXpress) System, BioArchive System and other accessories used for the processing of stem cells from cord blood in the Territories. Boyalife W.S.N. is also appointed as the exclusive service provider to provide repairs and preventative maintenance to ThermoGenesis products in the Territories.

The term of the agreement is for

three

years with ThermoGenesis having the right to renew the agreement for successive

two

-year periods at its option. However, ThermoGenesis has the right to terminate the agreement early if Boyalife W.S.N. fails to meet specified minimum purchase requirements.

Revenues

During the

six

months ended

December 31, 2017,

the Company recorded $

1,679,000

of revenues from Boyalife and had an accounts receivable balance of

$862,000

at

December 31, 2017.

During the year ended

June 30, 2017,

the Company recorded

$308,000

of revenues from Boyalife and had an accounts receivable balance of

$308,000

at

June 30, 2017.

Bill Payment Arrangement

The Company entered into a bill payment arrangemen

t whereby Boyalife Group Ltd. (Payor), the Company’s largest shareholder, agreed to pay the Company’s legal expenses payable to the Company’s attorney related to certain litigation involving SynGen Inc. (the “Bill Payment Arrangement”), although the Company remains jointly and severally liable for the payment of such legal fees. The terms of the Bill Payment Arrangement provided that the Company will reimburse Payor for any and all amounts paid by Payor in connection with the Bill Payment Arrangement under certain specified events. There is

no

interest payable on outstanding balance of related party payable. As of

December 31, 2017,

invoices totaling

$606,000

had been paid by Payor and are included in related party payable as the Company anticipates repaying this within a year.